Albert Manifold: Ross, it’s Albert. Look I know there’s an incredible focus on the first three months of the year. But it literally is a short snapshot. And let’s just take a step back here. Look, for sure, we’ve had a good start to the year. And as we look here, Randy mentioned, backlogs look — take us through the first half of the year looks strong and continues to be strong. So we’re in a good place and happy to be that. But let’s just take a step back here. Like we are at the early stages of a major growth cycle for our industry, but backed by unprecedented government support for both infrastructure spend both in the United States and indeed in Europe. On top of that, we’re seeing, again, very significant levels of reshoring and onshoring investment that’s going to drive demand in the commercial sector.
So honestly, as I look forward in the next five, six, seven years, I know we’re talking about one quarter results today. We’re looking pretty good as an industry all the way to the end of the decade. So the short-term, the medium-term and the long-term outlook, all look very positive for CRH. Now against that backdrop, I know you want to talk about the first three months of the year, but our focus in this business is on three main areas. Of course, number one, it’s an execution of our operational performance. Every day, we work at that here, delivering the performance in terms of profitability cash. Number two, I think, it’s crucially important now at the start of this major growth cycle is to invest in our businesses, investing for the next growth cycle.
And number three, as you expect from CRH to continue to be disciplined stewards of capital. We talk about how over the next five years, we will generate $35 billion of free cash flow. And this year, you’re starting to see what we’re doing with that. I expect us to spend close to $4 billion on M&A in this year with deals announced or deals already in the pipeline. On top of that, we’re going to spend about another $1 billion in growth CapEx. That’s $5 billion investing in the growth of our business for 2030 and beyond. In addition to that, with buybacks announced, the run rate we’re looking at and dividends, it’s likely we will distribute a further $3 billion back to our shareholders, dividends and share buybacks. So a very significant investment in the first year of that $35 billion that we’re seeing there.
The industry backdrop is good. We are the number one player in the United States and Europe. Therefore, we will be the major beneficiary in this growth cycle. And no one else can touch our cash generation. And particularly when we use that cash to drive performance for further growth and rewarding our shareholders. And again, we talked about the first quarter, but let’s just take a step back and look at the short and medium-term growth cycle and see where we are. And I think CRH positions itself very well for that.
Ross Harvey: That’s great. Thanks for your perspective, Albert and Jim.
Operator: Your next question comes from the line of Michael Dudas with Vertical Research Partners. Please go ahead.
Michael Dudas: Good afternoon, gentlemen. Hello? Can you hear me?
Albert Manifold: Yes, go ahead, Michael. Please go ahead.
Michael Dudas: Okay. Great. Thank you. Sorry about that. Yeah, thank you. First just quick, I know you gave a lot of details on the Texas acquisition. Relative to what you saw going into negotiations and what you’ve seen early on and relative to your playbook, are you at, behind or ahead of schedule relative to some — obviously you put out some pretty interesting synergy targets. Maybe you can just share some thoughts on that first.
Randy Lake: Yes, happy to. Well, I think, we’re satisfied so far. We’ve identified $60 million at this point in time. We’ll continue to dig in. But I think there’s a couple of things maybe to call out and we did a bit in the presentation. We are the largest building material supplier in the State of Texas. We have a really unique portfolio of businesses downstream consumers of cement, whether that’s the readymixed business or critical infrastructure or the outdoor living. So just the that internal consumption is a big value creator for us. But when you look at the context of that plant, along with our other plant in Midlothian, Texas, our assets in Arkansas as well as Kansas kind of that network optimization is a huge benefit from a transportation standpoint and the ability to serve that market in the way it needs to be served as it continues to grow.
So those are — that’s a nice pool of opportunity for us. I think the other bit, which we have called out in the past, I think, is important to say is that it’s a great example of Ash Grove. It’s probably the best most tangible example. In 2018, acquired that business and have doubled the profitability in six years. That was driven by the usage of internal resources to drive operational performance. So being a leading producer of cement, 40 plus plants around the world, optimizing, taking our best practices, applying those in terms of the plant in Hunter is another large pool of opportunity. And so we’ve clearly identified opportunity there. And then the last just kind of the housekeeping you would expect us to do in and around procurement and kind of weaving them into our underlying platform in terms of leveraging our size and scale.
So as I said, it’s a good look at it, and as of today, $60 million of opportunity so far.
Albert Manifold: I should say, Mike, just to add to what Randy just said. I mean, Randy, talked $60 million at this point in time. Our feet are just under the table there. We’ll see how it goes. But again, it’s worthwhile asking how do we do this? Well, CRH, the new owner of this business, brings technical capabilities, and it brings a solutions model, and that’s what delivers the extra profitability. So as compared to previous owners, we’re going to increase the profit of this business by over 30%. And it’s done because we have technical capability, but we integrated it into our solutions model, a model that now shows you versus previous owners who are dedicated, focused materials players, the solution model, it delivers higher profitability.
